Toffey Preps Benchmark for 2011 Launch

Benchmark Solutions, a New York-based startup pricing venture headed by Tradeweb co-founder Jim Toffey and with financial backing from private equity firm Warburg Pincus, is gearing up to launch a new, real-time fixed-income pricing service early next year.

Sources say the vendor has operated in stealth mode while testing its pricing models against historical data, and will next year unveil a feed of prices covering a range of fixed-income instruments and related derivatives - from liquid, vanilla assets to thinly traded, complex structures - starting with corporate bonds and credit default swaps, which will be displayed in a browser-based application for analyzing real-time data.

Benchmark combines the former credit derivatives pricing and valuations provider Julius Finance with the former BQuotes, a provider of mark-to-market prices for credit default swaps by extracting quote data from the unstructured text of email messages between dealers, which was acquired by Moody's in January 2008 and rebranded as Moody's CreditQuotes (IMD, Feb. 4, 2008). Moody's then sold the business to Benchmark around the start of the fourth quarter last year, after closing its evaluated pricing business and divesting its municipal bond pricing arm to Thomson Reuters (IMD, Sept. 7, Nov 16, 2009).

Sources say the vendor is still supporting clients of the former BQuotes software products, but that Benchmark will primarily use the parsing software to support its own data collection efforts, by "scraping" and transforming messages into structured, standardized price data. In addition, the vendor is also sourcing input data for its models from many other price feeds, the sources add.

Benchmark officials decline to comment before the vendor's launch next year, but its own recruitment collateral describes the company as combining proprietary algorithms with quantitative finance techniques and "high-quality data" to bring "much-needed transparency to the global market for fixed-income products. The same information places staff numbers varyingly at between 50 and 60 employees, and describes the vendor as ramping up for launch.

Brains Behind Benchmark

Besides Toffey - who appeared publicly in his role as chief executive at a joint Securities and Exchange Commission-Commodity Futures Trading Commission roundtable on Sept. 14 - the vendor has drawn heavily on Julius Finance staff, including former CEO Peter Cotton, who is now managing director and co-head of research and development at Benchmark; Stafford Lowe, former head of product sales and marketing at Julius Finance, who is now managing director and head of HR at Benchmark; and Yakov Kanter, managing director at Benchmark, who joined Julius Finance as president in February 2009 to head its independent valuation and consulting business line. Although Julius Finance's website is still live, the contact phone number listed on the site has been disconnected.

In addition, the vendor hired Bill Gartland - who left his former role as global head of market data at Tradeweb earlier this year (IMD, March 29) - as global director of product management, while other key executives include IT director Rob Stone and vice president of IT Kevin Callanan, both of whom joined from Kraft & Kennedy, a New York-based provider of technology and strategic consulting for legal and financial services firms.